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They sometimes and I mean only sometimes team up, but make no mistake, they really dislike each other.
During the war of the beard, the dwarves burned down and sackaged the elven colonies of the old world, and that war lasted for centuries, going back and forth. And after the war, the new phoenix king decided to abandon the colonies and asked the colonies' inhabitants to come back to Ulthuan. Most did , but some didn't, and eventually those who stayed for good entered the forest of Athel Loren, ultimately walking a different path from the rest of Ulthuan , becoming known as the wood elves.
So not only are the wood elves pissed off at the dwarves because of the dwarves cutting trees, but from even before the wood elves became wood elves, the wood elves had plenty of reasons to hate the dwarves. After all, they're the very civilians who got caught in the heart of that war, saw their cities besieged, maybe burned even by the dwarves, their king killed by the dwarves, and then ultimately got abandonned by their new king after the war ended.
The dwarves in reverse obviously don't like any kind of elves after that, and while the grudge of the war of the beard itself is settled, the skirmishes that keep happening between the WE and the dwarves at the border of the forest certainly made sure that there's always plenty of grudges to be settled between the two.
Iirc was fist conflict ignited by dwarves chopping down trees in Athel Loren. Woodelves killed the lumberjacks and the dwarfs retaliated in full force. But woodelves never really went out to attack dwarfen settlements as far as I remember from the lore.
Elves and dwarfs were still at bad terms from all that war of beard stuff. But yeah, if a dwarf feels wronged then there is little chance for communication.
Most dwarfs, like most humans, are happy to oblige.
The conflicts between dwarf holds and wood elves are actually pretty typical for their respective races, without much special consideration:
Elves massacre dwarfs who come too close.
Dwarfs come back to have their vengeance.
And so it goes.
In the War of Vengeance trilogy, it's primarily due to the work of the dark elves, who go about inciting enmity between the high elves and dwarfs by attacking dwarf merchant caravans, killing a rune smith elder in the process, and leaving white-shafted arrows behind to frame the high elves.
Because the dwarfs know nothing of the dark elves--or anything about the Sundering, as the high elves have kept it secret--the dwarfs grow increasingly wary of the high elves, and seek an audience with the high elf Phoenix King. Up to this point, high elves and dwarfs had been on friendly terms, so the dwarfs send a delegation to Ulthuan, to discuss the reports of elves murdering dwarfs in cold blood and the issue of recompense.
Unfortunately, the Phoenix King at the time is Caledor II ... who is a terrible king, considers dwarfs beneath his contempt, and finds the accusations of high elves murdering dwarf merchants completely absurd. As an arrogant joke, he "replies" to the dwarfs by having the beards of the dwarf delegation shaved off--not realizing (or caring) about how deeply shaming such an act is toward all dwarf kind. This, of course, angers the dwarfs, who quickly start to re-assess their friendship with the elves.
Other things happen--more dark elf plots, more skirmishes between high elves and dwarfs, cites get burned to the ground, dragons are let loose, another important dwarf is killed, etc.--and, over time, what started out as a huge misunderstanding gradually turns into a full blown war.
Near the end of the trilogy, as dwarfs are laying siege to the high elf colonies, they run into the first 'wild elves' of Athel Loren, who do not take too kindly to the dwarfs cutting down trees and using the area to stage their war effort.
Kind of missing some key details though relating to the book trilogy.
The Dark Elves started the whole thing which first began as skirmishes. The Dwarfs are the first to escalate things by being the first to raze a whole Elf city and leaving no survivors while at the same time sending delegates for one last attempt at diplomacy. The Phoenix King was furious that the Dwarfs would send a diplomat, right after they just butchered a whole city and so he shaved the ambassador's beard (which gave the name to the war).
Early on in the conflict, the High Elves figured out that the Dark Elves were responsible and did try to let the Dwarfs know about them, but the Dwarfs refused to believe the idea that there was such a thing as separate elf groups, despite being somewhat already aware of the elf civil war.
There are other things as well but the trilogy portrays both races being equally at fault in escalating things to the point of no return.